STATUTE OF LIMITATIONS ON IRS DEBTS

Statute of Limitations on IRS Debts

Radha Rothrock is a Cape Coral tax attorney. Her practice includes the negotiation and collection of unpaid IRS debt. The concept of placing a time limit on collecting a debt is called the “statute of limitations.” In general, the statute of limitations on IRS debts is ten years. IRC 6502(a)(1). There are several events that could extend or “toll” the statute of limitations.

(1) Offer in compromise. The filing of an offer in compromise will extend the statute of limitations on collection by the time it is pending plus 30 days. (2) Collection due process appeal. Timely responding to an IRS Final Notice of Intent to Levy – known as a collection due process hearing – will extend the time the IRS has to collect while your hearing is pending. A late-filed collection due process appeal – defined as filed within one year of the date of the Final Notice - does not extend the collection statute but does entitle you to an appeals “equivalent” hearing. See IRC 6330(e), IRM 5.1.9.3.6 and Treas. Reg. § 301.6330–1(g)(3), ex.1.

(3) Bankruptcy. Bankruptcy extends the statute of limitations on collection by the time you were in bankruptcy plus six months. If you filed bankruptcy but did not eliminate all of your tax liabilities, the IRS will have more time to collect the non-discharged taxes from you. See IRC 6503(h) and IRM 5.9.4.2.

(4) Innocent spouse relief. The collection period is suspended from the filing of the request for innocent spouse relief until the 90 day period for petitioning the Tax Court expires. If a Tax Court petition is filed on an IRS denial, time is tolled until the Tax Court decision becomes final, plus 60 days. See IRC 6015(e) and IRM 25.15.1.8.

(5) Taxpayer Assistance Order (911).If communications breakdown to the point of needing a Taxpayer Assistance Order to stop the IRS, the filing of Form 911 will suspend the statute of limitations on collection while your case is pending for review. See IRC 7811(d) and IRM 13.1.14

(6) Installment agreements. If the IRS refuses or defaults an installment agreement, you have the right to appeal that decision. If you do, the collection timeframe is extended during the appeal. See IRC 6331(k)(2)(d).

Tax Strategies for Statute of Limitations on IRS Debt

If the statute of limitations on IRS debt is approaching, you might be better off doing nothing and waiting for your limitations to run. Approaching the IRS with a settlement option could end up extending your limitations.

If You Owe Back Taxes, Contact the Rothrock Law Firm, Cape Coral tax lawyers